Business This Week ~ The Economist

The Treasury-bond market saw its biggest one-day sell-off this year. The yield on ten-year American government bonds jumped from 2.95% to 3.11%, after an agreement was reached between Barack Obama and Republicans in Congress on a package of tax cuts and other measures that is expected to cost $800 billion over the next two years.

America’s Treasury Department sold the remaining 2.4 billion common shares it held in Citigroup. The government spent $45 billion directly to prop up the bank during the financial crisis, but it claims that Citi’s bail-out has reaped a profit of $12 billion, after the latest share sale, for taxpayers. Meanwhile, the Treasury and the Federal Reserve accelerated their efforts to exit their investments in American International Group.

PepsiCo agreed to buy 66% of Wimm-Bill-Dann, a Russian company which produces dairy goods and fruit juice, for $3.8 billion. The purchase would be one of the biggest foreign investments yet seen in Russia outside the energy industry. In 1974 Pepsi-Cola became the first American product to be made and sold in the then Soviet Union. See article

Fortune Brands said it would split itself into three parts, spinning off its golf-equipment and home and security divisions to focus on its drinks brands, which include Jim Beam and Maker’s Mark, two celebrated Kentucky bourbon labels. Two months ago a hedge fund run by William Ackman, an activist shareholder known for persuading companies to sell assets, disclosed that it had accumulated an 11% stake in Fortune Brands.

Google exhibited the first laptops that will run on its Chrome OS operating system, using software to store applications and data on the web rather than a hard drive, resulting in much shorter boot-up times. The first Chrome OS computers will be sold by Acer and Samsung in 2011 and compete in the low-priced netbook market.

Meanwhile, Google opened an online e-book store in America. Google eBooks is a potential challenger to the dominance of Amazon and Apple in the digital-book market. Consumers can buy recent bestsellers and download free classic titles and read them on a number of devices, including the iPad, though not the Kindle. The service will be available in Europe and Asia next year.

The unemployment rate in the United States rose to 9.8% in November; it had been 9.6% in each of the previous three months. The unemployment rate has been above 9% for 19 consecutive months, the longest it has remained above that mark since the recession of the early 1980s.

Rio Tinto announced deals with its partners in China, including the creation of a joint venture with Chinalco to seek new sources of copper and coking coal. The mining company’s relationship with the Chinese government hit a low point in 2009 after Rio pulled out of a $19.5 billion financing arrangement with Chinalco. Separately, Riversdale, an Australian mining group with assets in Mozambique, confirmed it had been approached by Rio about a takeover.

The maiden launch into orbit of the first commercial spacecraft was successful. SpaceX, founded by Elon Musk, an entrepreneur, hopes its Dragon capsule will start ferrying astronauts and cargo to the International Space Station next year for NASA when the agency’s shuttle programme comes to an end.

A panel of judges in France found Continental Airlines and one of its mechanics guilty of manslaughter in the events leading to the crash shortly after take-off of an Air France Concorde in 2000, which killed 113 people. The judges ruled that metal debris that fell from a Continental jet on the runway at Charles de Gaulle airport in Paris caused the crash. The American airline’s lawyers said the decision was “absurd” and designed to protect French “national interests”.